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Swiss fund to allocate 3% to hedge funds

SWITZERLAND – The SFr 4.6bn (€3.2bn) Bernische Lehrerversicherungskasse (BVLK), the pension and insurance fund for teachers in the Swiss canton of Berne, is to allocate 3% of its assets to hedge funds to help it achieve its long-term goal of 6.6% returns and to make up for poor overall performance in 2001 which was -7%.

The BVLK announced earlier this year that it was considering diversifying to include either currency risk hedging or currency overlay in its overall investment strategy. A spokesman for the fund says it opted for hedge funds as it can manage them in-house.

“Our new investment committee not only felt it was prudent to diversify and reduce the risk in our overall asset allocation strategy in light of recent market volatility but also to modernise the strategy so we have less reliance on equities and fixed income.”

“We had already incorporated venture capital three years ago and extended our real estate portfolio. Going for hedge funds over currency overlay saves us time and money, as we don’t have to look outside the BCVK for managers,” he says.

Other than the 3% allocation to hedge funds, the BVLK has 42% of its assets invested in fixed income, 34% in equities, 15% in property and mortgage funds, 3% in venture capital and 3% in cash funds.

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